Thai Oil Public Co. Ltd. · SET:TOP
Thai Oil Public — Q1 2016 Earnings Presentation
59 slides from Thai Oil Public's earnings presentation, May 13, 2016
Slide 1: Thai Oil Q1/2016 Analyst Presentation
Thai Oil Public Company Limited Q1/2016 Analyst Presentation 13 May 2016 Time : 9.30am. - 12.00pm. Venue : ENCO - Synergy Hall Building C, 6th Floor
Slide 2: Disclaimer
-2- Disclaimer The information contained in this presentation is intended solely for your personal reference. Please do not circulate this material. If you are not an intended recipient, you must not read, disclose, copy, retain, distribute or take any action in reliance upon it. Some statements mad
Slide 3: Corporate Vision, Mission and Values
-3- Corporate Vision, Mission and Values A LEADING FULLY INTEGRATED REFINING & PETROCHEMICAL VISION COMPANY IN ASIA PACIFIC • To be in top quartile on performance and return on investment • To create a high-performance organization that promotes MISSION teamwork, innovation and trust for sustainabil
Slide 4: Corporate Governance Policy
-4- Corporate Governance Policy Roles and Responsibilities for Corporate Governance Policy Stakeholders The board of directors, management • Truthfully report company’s situation and and all staff shall commit to moral future trends to all stakeholders equally principles, equitable treatment to all
Slide 5: Presentation Agenda
-5- Presentation Agenda Q1/16 KEY HIGHLIGHTS KEY PROJECT UPDATE Q1/16 PERFORMANCE ANALYSIS 2H16 & 2016 MARKET OUTLOOK
Slide 6: Q1/16 Key Highlights
-6- Q1/16 KEY HIGHLIGHTS
Slide 7: Q1/16 Key Market Drivers Highlights
Key Highlights -7- Q1/16 Key Market Drivers Highlights Refinery Implication Soften MKT GRM pressured by 1.) lower middle Soften Mkt GRM at 6.1 distillate spread as abundant supply amid weak $/bbl (Q4/15 = 8.5 $/bbl) demand during mild winter 2.) higher crude premium Weaken Dubai particularly in
Slide 8: Q1/16 Key Events / Achievements
Key Highlights -8- Q1/16 Key Events / Achievements Key Events / Achievements Q1/16 TOP Group Net Profit Unit : million THB (MB) High Refinery run at 107% & optimized Net Operating Profit (before tax) Stock G/(L) (before tax) run for Aromatic & Lube Base at 80% and Reversal of NRV/(NRV) (before tax
Slide 9: Key Project Update
-9- KEY PROJECT UPDATE
Slide 10: Key Project Completion / Progress Update
Ongoing Project Update -10- Key Project Completion / Progress Update Project Detail / Progress • Successfully COD on 25 Feb 2016 Linear Alkyl • On technical aspect, plant is successfully Benzene (LAB) test run and capable to run up to 120% (at 120 KTA) • CAPEX = 400 M$ • On commercial aspect, trial
Slide 11: Q1/16 Performance Analysis
-11- Q1/16 PERFORMANCE ANALYSIS
Slide 12: Thailand Leading Refinery: Superior Utilization / Commercial
Refining -12- Thailand Leading Refinery : Superior Utilization/ Commercial Total Thailand Crude Refining Capacity 1,252 kbd1 TOP’s Refinery Utilization vs. Industry4 Thai Oil 22% Share Fang Nameplate Capacity TOP Refinery Overall Industry (Thailand) (3 kbd) Thai Oil (275 kbd) 110% 107% 106% PTT’s Pr
Slide 13: Q1/16: Softer GRM Pressured by Declined Middle Distillate
Refining -13- Q1/16: Soften GRM Pressured by Declined Middle Distillate Dubai Crude Price & Key Petroleum Product Spreads Refinery Utilization 2015 2016 2015 Q1/16 Q4/15 Q1/15 $/bbl Q1 Q2 Q3 Q4 Q1 Q2TD* FY15 107% 110% 106% DUBAI (DB) 51.9 61.3 49.7 40.7 30.4 39.7 50.9 % MB Intake/OSP* ULG95 - DB 15.
Slide 14: Q1/16: Higher Aromatics Margins Supported by Supply Outages
Aromatics -14- Q1/16: Higher Margins Supported by Supply Outages Aromatics Spreads and Margins Aromatics Production 2015 2016 2015 Q1/16 Q4/15 Q1/15 $/ton Q1 Q2 Q3 Q4 Q1 Q2TD* FY15 80% 85% 66% PX*-ULG95 255 246 233 288 332 331 256 Market Highlight BZ-ULG95 98 115 74 101 156 176 97 + Improved PX/BZ m
Slide 15: Q1/16: Lower Base Oil Margins Pressured by New Supply
Lube Base Oil -15- Q1/16: Lower Base Oil Margins Pressured by Concern on New Supply Base Oil & Bitumen Spreads & Margins Base oil Production 2015 2016 2015 Q1/16 Q4/15 Q1/15 $/ton Q1 Q2 Q3 Q4 Q1 Q2TD* FY15 88% 90% 79% 500SN-HSFO 369 399 506 450 427 392 431 % Base Oil & Specialty Sale Volume BITUMEN-
Slide 16: Integrated Margin & Competitive Cash Cost
Financial -16- Integrated Margin & Competitive Cash Cost Gross Refining Margin Refinery’s Cash Cost (Unit: US$/bbl) (Unit: US$/bbl) Market GRM Accounting GRM (Market GRM + Stock G/L) Operating Cost Interest Expense (net) (excl. one-time non- operating item) 8.5 7.8 5.7 5.9 5.2 6.1 5.1 5.1 4.3 2.1 2.
Slide 17: Q1/16: Performance Breakdown
Performance Breakdown -17- Q1/16: Performance Breakdown Utilization/Production (%) & Net Profit (million THB) Key Points • TOP: high run to capture domestic market and good GRM ***74% • TPX: optimized run and improved holding contribution from higher spread & lower energy cost • TLB: soften contribu
Slide 18: Q1/16 TOP Group Consolidated P&L
Financial -18- Q1/16 TOP Group Consolidated P&L (million THB) Q1/16 Q4/15 QoQ+/(-) Q1/15 YoY+/(-) Sales Revenue 56,790 68,446 (11,656) 71,366 (14,576) Hedging Gain 27 1,053 (1,026) 76 (49) EBITDA 6,653 6,348 305 6,209 444 EBITDA excl. Stk G/(L) & Reversal of 6,964 10,514 (3,550) 5,210 1,754 NRV/(NRV
Slide 19: Q1/16 TOP Group Consolidated Cash Flow
Financial -19- Q1/16 TOP Group Consolidated Cash Flow (Unit: Million THB) (Unit: Million THB) Operating Cash Flow Investments Q1/16 Q1/15 Q1/16 Q1/15 Operating Cash Flow 9,763 9,413 Investments (18,725) (7,746) Net income & non-cash adj. 6,378 4,232 + ST investments (16,293) (5,128) CAPEX (PP&E) & o
Slide 20: Strong Financial Position & Financial Ratios
Financial -20- Q1/16 TOP Group Strong Financial Position & Financial Ratios Statements of Financial Position Consolidated Long-Term Debt as at 31 Mar 16 1) (Unit: million THB) Total Long-Term Debt Net Debt 192,166 202,684 74,915 million THB 15,981 million THB Cash & ST (US$ 2,116 million (US$ 451 mi
Slide 21: 2H-16 & 2016 Market Outlook
-21- 2H-16 & 2016 MARKET OUTLOOK • Crude Oil • Petroleum Products • Aromatics • Base Oil & Bitumen • LAB
Slide 22: Crude Oil
-22- CRUDE OIL
Slide 23: Crude Oil Market: Oil Market Rebalance is Still at Risk
Refinery -23- Crude Oil Market: Oil Market Rebalance is Still at Risk Dubai Price Movement $/BBL Declining US Greek Debt China’s Stock OPEC failed to No consensus Oil Rigs Default Market Crash agree on an Fed Rate on output 80 Hike output ceiling freeze 60 1 2 40 Conflict Iran’s Nuclear 20 in Yemen
Slide 24: Strong Buying Interest on Expectations of Tighter Supply in 2H-16
Refinery -24- Strong Buying Interest 1 On Expectations of Tighter Supply in 2H-16 A U.S. Shale Oil Output Sets to Decline B U.S. Crude Stocks Expected to Draw in 2H-16 U.S. Shale Oil Production by Field MBBL U.S. Commercial Crude Inventory MBD - 0.4 MBD YoY 550 6 in 2016 5 4 450 3 2 350 1 Q2: Summer
Slide 25: Full Price Recovery is Still at Risk, Limited by Ample Supply
Refinery -25- Full Price Recovery is Still At Risk, 2 Limited By Ample Supply A OPEC to Continue Defending Market Share B Faster-than-Expected Return of Iranian Oil Record-High OPEC Production Iran’s Oil Production MBD Output freeze OPEC failed to MBD International deal failed 34 agree on quota Sanc
Slide 26: Petroleum Products
-26- PETROLEUM PRODUCTS
Slide 27: Steady Refinery Margin in 2H-16 on Recovered Middle Distillate Cracks
Refinery -27- Steady Refinery Margin in 2H-16 on Recovered Middle Distillate Cracks Singapore Cracking GRM ($/BBL) 8.5 7.9 8.0 7.6 7.7 5.8 6.3 5.8 6.1 4.8 5.3 5.1 Y2014 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Y2015 1Q16 2Q16TD 2016 Actual Forecast Sources: Reuters, TOP’s estimate ($/BBL) Q4-15 2015
Slide 28: Stable Gasoline Cracks on Summer Demand
Refinery -28- 1 Stable Gasoline Cracks on Summer Demand A Softer Gasoline now on Pre-Building Stocks C US Market to Support by Driving Demand ARA and Singapore Gasoline Stocks MBBL US Gasoline Demand MBD 30 Refiners have built up Gasoline Y2016 : +167 KBD (+1.8%) 10.0 stocks since Jan’16 for summer
Slide 29: Middle Distillate Cracks Hit the Bottom in Q3/16 and Recover in Q4/16
Refinery -29- Middle Distillate Cracks Hit the Bottom in Q3/16 2 and Will Recover in Q4/16 on Cold Weather A Surplus on High Refinery Run Rates C 70 percent of La Nina in Q4/16 Asia Pacific Refinery Run Percent of La Nina in the next winter MBD 29.0 Y2016 : +680 KBD (+2.5%) (Nov’15 – Jan’16) followi
Slide 30: Demand Growth Better than Supply Growth on Refinery Closures
Refinery -30- Demand Growth Better than Supply Growth on Refinery Closures and Project Delays in China CDU Addition VS Additional Demand – AP & ME Middle East China Australia Japan India Other AP Vietnam Net Addition AP & ME Demand KBD 1200 1000 800 600 400 507 454 479 200 282 0 156 88 -200 -400 201
Slide 31: Thailand Petroleum Demand Growth
Thailand’s Oil Demand -31- Thailand’s Oil Demand in 2016 Thailand Petroleum Demand Growth YTD 3M 2016(B) Year on Year Y 2015(B) Y 2016(C) (vs. 3M 2015) Mogas (A) +13.3% +11.0% +7.1% Jet/Kero +9.7% +4.9% +4.4% Diesel (A) +4.0% +4.9% +2.2% Fuel Oil -1.4% +28.4% +14.7% Total +6.6% +7.4% +4.4% GDP +2.8%
Slide 32: Aromatics
-32- AROMATICS
Slide 33: Slightly Softer Aromatics Market on New Capacity in 2H-16
Aromatics -33- Slightly Softer Aromatics Market on New Capacity in 2H-16 Capped by New Derivative Demand Aromatics Market PX-ULG95 ($/TON) BZ-ULG95 ($/TON) 371 332 331 327 279 273 288 268 285 252 255 246 233 256 254 220 207 156 176 98 115 101 97 74 Y2014 Y2015 3Q14 1Q14 2Q14 4Q14 1Q15 2Q15 3Q15 4Q15
Slide 34: Slightly Softer PX Market due to New Capacity
Aromatics -34- 1 Slightly Softer PX Market due to New Capacity A New PX Capacity will Pressure Market in 2H-16 B Lower PX Plants Turnaround in 2H-16 AP/ME Effective PTA & PX Capacity Addition AP Nameplate PX Capacity Turnaround Mil TON Mil TON 2 5 Reliance Industries No.4 startup in Q3-16 resulting
Slide 35: Slightly Softer BZ Market due to New Capacity
Aromatics -35- 2 Slightly Softer BZ Market due to New Capacity but Limited by Derivative Demand A New BZ Capacity will Enter to the Market in 2H-16 B Lower BZ Plants Turnaround in 2H-16 AP/ME Effective Derivatives & BZ Capacity Addition Mil TON AP Nameplate BZ Capacity Turnaround Mil TON 5 2 4 Relia
Slide 36: Base Oil & Bitumen
-36- BASE OIL & BITUMEN
Slide 37: Soft Base Oil Spread in 2H-16 due to Weak Demand
Base Oil & Bitumen -37- Soft Base Oil Spread in 2H-16 due to Weak Demand amid Additional Supply Base Oil Benchmark Spread ($/TON) 1 Global Additional Nameplate Capacity Million TON 8.0 495 486 501 500 493 506 450 431 427 392 369 399 6.0 4.8 4.0 2.0 0.9 0.0 0.0 0.4 Y2014 Y2015 Y2016 1Q14 2Q14 3Q14 4Q
Slide 38: Lower Bitumen Spread in 2H-16 on Lull Seasonal Demand
Base Oil & Bitumen -38- Lower Bitumen Spread in 2H-16 on Lull Seasonal Demand amid High Inventories Bitumen Market Bitumen Benchmark Spread ($/TON) Average Import Volume of Major KTON/MONTH Asian Players 85 98 82 56 500 23 20 400 -7 300 -32 -36 -69 -77 -66 200 100 2016 2Q16TD Y2014 Y2015 1Q14 2Q14 3
Slide 39: LAB
-39- LAB
Slide 40: Steady LAB Spread in 2H-16 on Stable LAB Market
LAB -40- Steady LAB Spread in 2H-16 on Stable LAB market LAB Market LAB - BZ ($/TON) South East Asia LAB Demand and Supply KTA 655 500 549 591 557 582 544 569 532 504 505 513 505 400 300 200 100 Y2014 Y2015 Y2016 4Q14 1Q16 1Q14 2Q14 3Q14 1Q15 2Q15 3Q15 4Q15 2Q16TD 0 2014 2015 2016 LAB-BZ Forecast De
Slide 41: Conclusion
-41- CONCLUSION
Slide 42: 2H-16 Market Outlook Conclusion
Conclusion -42- 2H-16 Market Outlook Conclusion (vs. 1H-16) Refinery Steady Refinery Margin on higher Middle Distillate Cracks Slightly softer Aromatics market on new capacity Aromatics capped by new derivative demand Soft Base oil spread on new Gr.II Base Oil plants Lube Base Soft Bitumen spread pr
Slide 43: Thank You
-43- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Slide 44: Appendix
-44- APPENDIX • Strategic Investment Plan • 2015 Dividend Payment • Optimized & Flexible Operations…Superior Performance • CDU Addition VS Additional Demand – AP & ME • World GRM / Inventories • Thailand petroleum demand by products
Slide 45: Strategic Investment Plan
Updated CAPEX plan -45- Strategic Investment Plan CAPEX Plan (Unit US$ million) Remaining capital investment Projects COD Total Project Cost Our CAPEX (2011-2018) 2015 2016 2017 2018 investments will Reliability, efficiency and flexibility 2013-2018 353 21 60 5 4 cover improvements improvement in pl
Slide 46: 2015 Dividend Payment
Financial -46- 2015 Dividend Payment Dividend Policy : Not less than 25% of consolidated net profit after deducting reserves, subject to cash flow and investment plan Unit : THB/Share EPSR 2H dividend 9.40 9.19 1H dividend Year Dividend 7.82 8.13 7.28 5.91 6.04 5.97 4.39 4.57 2.75 2.00 2.00 1.00 3.5
Slide 47: Optimized & Flexible Operations...Superior Performance
-47- Optimized & Flexible Operations…Superior Performance Crude Assays based on Sources of Product Domestic demand for Reference Price TOP configuration* Crude output petroleum products** % S = 1.43 % S = 2.52 % S = 0.78 % S = 1.97 1% SAUDI 1 LPG Others *** 7% 5% API = 32.0 API = 31.2 API = 39.4 API
Slide 48: Demand Growth Outpacing Supply Due to Refinery Closures
Refinery -48- Demand Growth Outpacing Supply Due to Refinery Closures CDU Addition VS Additional Demand – AP & ME Start-up Country Nameplate Company period) (KBD) AP Additional Demand ME Additional Demand Q1-15 UAE 417 Ruwais Middle East China Q2-15 China 70 Local Rizhao Lanqiao Australia Japan Indi
Slide 49: Asian Margin vs. US-EU Margin
World GRM -49- Asian Margin Vs. US-EU margin 92.02% 59.70% 70.86% Total Capacity: 17.5 MBD Total Capacity: 17.0 MBD Total Capacity: 4.9 MBD Source: EIA, Norwegian Energy, Thai Oil
Slide 50: Crude Inventory
Inventories -50- Crude Inventory Source: Norwegian Energy
Slide 51: Global Distillate Inventory
Inventories -51- Global Distillate Inventory Source: Norwegian Energy
Slide 52: Fuel Oil Inventory
Inventories -52- Fuel Oil Inventory Source: Norwegian Energy
Slide 53: China's Product Export
China Export -53- China’s Product Export Source: Norwegian Energy
Slide 54: Domestic LPG Demand
-54- Domestic LPG Demand Thailand LPG Demand LPG Demand Highlight • In Q1/2016, LPG demand fell significantly by 10.3%YoY on account of lower usages in all sectors. Most of the decline came from petrochemical sector which its feedstock switching from LPG to Naphtha leading to 20.9%YoY drop in this s
Slide 55: Domestic Gasoline Demand
-55- Domestic Gasoline Demand Thailand Gasoline Demand GASOLINE Demand Highlight • In Q1/2016, Mogas demand jumped sharply by 11.0%YoY to an average 28.22 mml/day. This was mainly due to lower retail prices and higher number of passenger cars since the end of the last year, as a result of avoiding n
Slide 56: Domestic Jet Demand
-56- Domestic Jet Demand Thailand JET-A1 Demand JET Demand Highlight • In Q1/2016, Jet consumption increased significantly by 5.0% over the corresponding period last year mainly owning to booming tourism industry. The expansion in tourism sector was a result of the 31.2%YoY and 8.6%YoY increasing nu
Slide 57: Domestic Gasoil and NGV Demand
-57- Domestic Gasoil and NGV Demand Thailand Gasoil Demand Diesel Demand Highlight • In Q1/2016, Diesel demand rose gradually by 4.9% YoY as relatively low retail prices boosted the consumption amidst higher number of accumulated commercial vehicles. Nevertheless, demand growth was curbed by the low
Slide 58: Domestic Fuel Oil Demand
-58- Domestic Fuel Oil Demand Thailand Fuel Oil Demand FUEL OIL Demand Highlight • In Q1/2016, Fuel Oil consumption jumped rapidly by 28.8%YoY, as a result of sharply increase by 27.3%YoY in transportation demand. Last year, transport activity in Thai fishery was pressured by EU warning of the conce
Slide 59: Thank You
-59- Thank You Any queries, please contact: at email: ir@thaioilgroup.com Tel: 662-797-2999 / 662-797-2961 Fax: 662-797-2976
Thai Oil Public Company — Q1 2016 Earnings Presentation on 6ix